Global Direct Commercial Real Estate Investment Leaps 21 percent in 2005 to Reach USD 475bn

Cannes (France) March 15 (PROTEXT/PRNewswire) - According to Jones LangLaSalle's New Report 'Global Real Estate Capital - More Markets, MoreCompetition'.

MIPIM - Jones Lang LaSalle's latest global real estate capital report,released today at MIPIM, records global direct commercial real estateinvestment of USD 475bn (euro 383bn) in 2005, up 21 percent on 2004. NorthAmerica remained the largest investment destination (nearly half of totaltransaction volumes) whilst Asia Pacific witnessed the strongest year onyear transaction volume growth at nearly 56 percent. Cross-borderinvestment (as a proportion of total investment) increased from 29 percentin 2004 to 35 percent in 2005, reaching USD164bn (euro 132bn), with Europeaccounting for over two thirds of volume transacted.

Inter-regional investment transaction volumes rocketed by 40 percent andnow account for almost a quarter of total global transaction volumes. Thisimpacted most on Europe which attracted 60 percent of inter-regionalpurchase volumes, whilst the US was the most popular country forinter-regional investment followed by the UK, Germany, France and Sweden.

Global sources of funds dominated inter-regional investment in 2005,accounting for approximately USD 32.9bn (euro 26.5bn) on the buy side andUSD 28.9bn (euro 23.3bn) on the sell side, an indication that theseinvestors are actively managing their international property portfolios toachieve higher returns and international diversification. Whilst US andAustralian investors each accounted for 14 percent of inter-regionalpurchases, Middle Eastern investors also remained a major source ofinter-regional capital (USD 9.9bn, euro 8.0bn), purchasing significantvolumes in both Europe and South America and accounting for 13 percent ofinter-regional purchases.

Tony Horrell, CEO of Jones Lang LaSalle's International Capital Group,commented: "As allocations to international real-estate grow, opportunisticcapital is increasingly targeting the shores of recovering and emergingmarkets. Germany's economic recovery and real estate market re-emergencecontinued in 2005; we saw inter-regional investors make USD 10.8bn (euro8.7bn) of purchases and USD 6.1bn (euro 4.9bn) of sales. Unlike otherrecovering and re-emerging markets, Germany offers cross-border investors asignificant stock of opportunities; retail in particular is proving popularas it offers high-yields, potential rental growth and significant assetmanagement opportunities."

He continued: "Similarly sustained economic recovery and the end ofdeflation in Japan has encouraged real estate investors to return to theJapanese market which is driving yields down and prices up. Investmentvolumes were up by 28 percent over 2004 levels, with the majority ofinvestments made by Japanese listed, unlisted and institutional funds. WithJapanese corporate earnings rebounding, unemployment and office vacancyrates declining; the scene is set for a strong recovery in the occupiermarket. Japan is a market to watch in 2006."

Report highlights:

- France - Continued strength in attracting inter-regional capital,recording USD 7.2bn (euro 5.8bn) of purchases and USD 5.0bn (euro 4.0bn) ofsales for positive net inflows of approximately USD 2.2bn (euro 1.8bn).Global investors dominated inter-regional purchase activity, with the Parisoffice market (one of the largest in Europe) being a favoured destinationfor international money due to its high transparency and good rental growthprospects.

- The UK - At an inter-regional level, the UK was dominated by Global,Middle Eastern and US sources of funds although intra-regional sources ofcapital were also significant, namely Irish at USD 7.6bn (euro 1bn) andGerman at USD 4.3bn (euro 3.5bn).

- The US - USD 21.8bn (euro 17.6bn) of purchase activity was recorded in2005 and USD 14.0bn (euro 11.3bn) of sales activity, recording a positivenet inflow of USD 7.8bn (euro 6.3bn).

- Latin America - 2005 was a strong year for cross-border flows into LatinAmerica, in particular Mexico as it increasingly becomes a target forinter-regional capital, recording USD 2bn (euro 1.6bn) of purchases andUSD.08bn (euro 0.6bn) of sales.

- China - In 2005, China emerged as an increasingly popular destination forinter-regional capital, recording USD 2.3bn (euro 1.9bn) of purchases.Although inter-regional transaction volumes in China are currently farsmaller than the larger markets of UK, USA, Germany and France, thepotential proportion of investible stock will continue to grow with rapideconomic expansion, relaxed foreign investment laws and improvingtransparency. China is set to be another strong growth market in 2006.

- Investor types - Inter-regional purchase activity in 2005 wasoverwhelmingly dominated by unlisted and listed funds and institutions.Unlisted funds were the largest inter-regional purchasers in 2005 -increasing their purchases by 73 percent over 2004 levels. Increasing theirshare of inter-regional purchase activity by 55 percent. Institutions weresignificantly more active in 2005, however were overall net sellers.

- Key market sectors - In 2005, inter-regional investment saw relativelylittle change in the overall distribution of capital between propertysectors. Office transactions remained the dominant sector, accounting forapproximately 56 percent of total transactions, retail 26 percent,industrial 13 percent and hotels 5 percent.

- Liquidity - In Europe and North America Jones Lang LaSalle estimates over10 percent of investor owned real estate (both public and private) changedhands in 2005, offering unprecedented levels of liquidity.

Looking ahead, Tony Horrell concluded: "We expect capital flowing into realestate to continue to outweigh suitable opportunities as real-estateremains an attractive asset class, relative to equities and bonds. Keythemes we predict going forward include a competitive and structured debtmarket driving weight of capital and the globalisation of REIT markets andpooled asset vehicles, both of which will accelerate the globalisation ofdirect real estate investment."

Notes to Editors

1. Cross-border activity is classified as inter-regional (either or bothpurchaser and vendor originate from outside the region in which thetransaction occurs) or intra-regional (either or both purchaser and vendororiginate from outside the country in which the transactions occurred;however neither is from outside the region).

2. 'Global sources of funds' can be defined as an investment fund thatraises capital from multiple countries, i.e. not identifiable to a singlecountry, even though the sponsor of the fund may be domiciled in a specificcountry.

3. Methodology

Previously reported transaction volumes were revised in 2005 to exclude theinvestment grade residential sector. The report now focuses on thecommercial real estate sectors popular with inter-regional investors, andexcludes multi-family residential real estate.

Annual figures, like-for-like comparison:

Total Cross Border

2003 USD 354bn (euro 285bn) USD 90bn (euro 73bn)

2004 USD 393bn (euro 317bn) (+11 percent) USD 114bn (euro 92bn)(+26 percent)

2005 USD 475bn (euro 383bn) (+21 percent) USD 164bn (euro 132bn) (+43percent)

4. Exchange rate used: euro 1 = USD 1.24 (average daily rate during 2005)

About Jones Lang LaSalle

Jones Lang LaSalle (NYSE: JLL) has more than 100 offices worldwide andoperates in more than 430 cities in 50 countries. With 2005 revenues ofapproximately USD 1.4 billion, the company provides comprehensiveintegrated real estate and investment management expertise on a local,regional and global level to owner, occupier and investor clients. JonesLang LaSalle is an industry leader in property and corporate facilitymanagement services, with a portfolio of 923 million square feet worldwide.In 2005, the firmcompleted capital markets sales and acquisitions, debtfinancings, and equity placements on assets and portfolios valued at USD 43billion. LaSalle Investment Management, the company's investment managementbusiness, is one of the world's largest and most diverse real estate moneymanagement firms, with approximately USD 30 billion of assets undermanagement. For further information, please visithttp://www.joneslanglasalle.com.

Web site: http://www.joneslanglasalle.com

Source: Jones Lang LaSalle

Charlotte Freeman, tel.: +44-(0)-7899-992-237, e-mail:charlotte.freeman@eu.jll.com or Madeleine Little, tel.:+44-(0)-7843-038-128, e-mail: madeleine.little@eu.jll.com both of JonesLang LaSalle

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